- Bookmark
- Share
- CaseIQ
Shah Babulal Balkrishna v. State Of Gujarat
Factual and Procedural Background
The petitioner, a Class I officer serving as Chief Town Planner and Architectural Advisor of the Gandhinagar Capital Project, filed a Special Civil Application challenging the respondents' decision to withhold his gratuity and seeking quashing of an order dated 25.8.1989 that directed continuation of an inquiry after his retirement. The petitioner had been served with a charge-sheet dated 18.10.1988 alleging misconduct for the period 1.2.1978 to 11.2.1980 when he served as Senior Town Planner in the Ahmedabad Urban Development Authority, and another charge-sheet dated 30.8.1989 (the day before his retirement). The respondent invoked Rule 189A of the Bombay Civil Services Rules, 1959 and passed an order dated 25.8.1989 continuing the inquiry, which resulted in withholding the gratuity payable to the petitioner.
The Special Civil Application was admitted by the Court on 28 January 1991, and by interim order the respondents were directed to deposit the gratuity in Court. The respondents deposited Rs. 77,625 on 15 February 1991. Subsequent interim orders released most of that amount to the petitioner, and Rs. 5,000 remained in a fixed deposit under Court order. The petitioner filed Civil Application No. 6626 of 1996 seeking, among other relief, interest on the withheld amount for the period 1.9.1989 to 15.2.1991 and costs.
Both departmental inquiries were ultimately concluded in the petitioner's favour by orders dated 13 September 1994 and 15 July 1995, with the petitioner exonerated of the charges. The Court found that withholding of gratuity for the period 1.9.1989 to 15.2.1991 was unreasonable given the exoneration and that the petitioner was entitled to consequential relief.
Legal Issues Presented
- Whether the respondents' withholding of the petitioner's gratuity (by continuing the departmental inquiry under Rule 189A) was arbitrary, unreasonable, discriminatory and violative of Articles 14 and 16 of the Constitution.
- Whether the order dated 25.8.1989 directing continuance of the inquiry after retirement was liable to be quashed.
- Whether the petitioner was entitled to interest on the amount of gratuity withheld for the period 1.9.1989 to 15.2.1991, and at what rate.
- Whether the petitioner was entitled to costs of the Special Civil Application and related Civil Applications.
Arguments of the Parties
Petitioner's Arguments
- The respondents' action of withholding gratuity was null, void, arbitrary, unreasonable, discriminatory and violative of Articles 14 and 16 of the Constitution.
- He sought payment of the withheld gratuity together with interest from 1.9.1989 until payment; in a subsequent Civil Application he specifically sought interest at 18% p.a. on Rs. 77,625 for the period 1.9.1989 to 15.2.1991.
- The petitioner relied on the fact that both departmental inquiries were ultimately concluded in his favour, entitling him to consequential benefits including interest and costs.
Respondents' Arguments
- The respondents contended that interest, if any, should be awarded at the rate of 9% p.a. in accordance with a Government Resolution (as argued by respondents' counsel).
- The respondents had deposited the gratuity amount in Court pursuant to interim directions, which the respondents relied on in opposing costs.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Union of India v. S.S. Sandha Walia, JT 1994 (1) SC 62 | Authority where the Supreme Court awarded interest at the rate of 12% p.a. on amounts payable to a government servant on retirement which had been illegally withheld, as compensation for loss of use of money. | The Court relied on this precedent to justify awarding interest at 12% p.a. on the gratuity amount withheld from the petitioner for the relevant period (1.9.1989 to 15.2.1991). |
Court's Reasoning and Analysis
The Court's analysis proceeded on the following lines, based strictly on the material in the opinion:
- The Court noted that both departmental inquiries were concluded in the petitioner's favour (orders dated 13.9.1994 and 15.7.1995) and that no charge was proved against the petitioner. As a result, the initial decision to withhold gratuity lacked justification.
- The Court observed that the petitioner had waited a reasonable time before filing the Special Civil Application, but that the respondents nonetheless took four to five years to complete the inquiries; the delay contributed to the injustice caused to the petitioner.
- Although the respondents deposited the gratuity in Court on 15.2.1991 pursuant to interim orders, the respondents had withheld the amount (Rs. 77,625) for the period 1.9.1989 to 15.2.1991 without justification. The Court held that the petitioner had been deprived of use of his money during that period and should be compensated.
- The petitioner had sought interest at 18% p.a. in one application, while the respondents argued for 9% p.a. under a Government Resolution. The Court rejected the respondents' contention that 9% was appropriate and observed that a long-term fixed deposit would have yielded at least 12% p.a.
- The Court relied on the Supreme Court decision in Union of India v. S.S. Sandha Walia, where 12% p.a. interest was awarded on similar facts, to conclude that awarding 12% p.a. in the present circumstances was reasonable.
- Regarding costs, the Court considered that the petitioner, a retired government officer, incurred legal fees (including fees to three advocates) and other expenses in prosecuting the Special Civil Application and related Civil Applications. The respondents did not dispute that such expenses were incurred. Taking the totality of circumstances and the figures provided by the petitioner, the Court found it appropriate to award Rs. 10,000 by way of costs.
- The Court set out specific directions and timeframes for calculation and payment of interest and costs, and for the release of the remaining fixed deposit amount with accrued interest.
Holding and Implications
Holding:
The Special Civil Application succeeds.
The specific orders (as stated in the opinion) are:
- The respondents are directed to pay interest to the petitioner at the rate of 12% p.a. on Rs. 77,625 for the period from 1st September 1989 to 15th February 1991. The respondents must calculate the amount of interest within one month from receipt of the certified copy of the order and make payment within one month thereafter.
- The respondents are directed to pay Rs. 10,000 to the petitioner by way of costs, payable within two months from receipt of the certified copy of the order.
- The amount of Rs. 5,000 lying in fixed deposit under the Court's earlier order is directed to be paid to the petitioner forthwith with accrued interest.
- Rule is made absolute and the application is allowed.
Implications:
The direct consequences are the payment of statutory gratuity now supplemented by interest for the period it was withheld, and an award of costs to the petitioner. The opinion does not purport to set any novel legal principle beyond applying an existing Supreme Court authority on awarding interest for illegally withheld retirement dues; no new precedent is stated to have been created in this judgment.
S.K Keshote, J.:— Heard learned Counsels for the parties.
2. The petitioner who was holding the post of class I. i.e Chief Town Planner and Architectural Advisor, Gandhinagar Capital Project, filed this Special Civil Application and prayed therein that the action of the respondents of withholding the amount of gratuity payable to him be declared null and void, arbitrary, unreasonable, discriminatory and violative of Arts. 14 and 16 of the Constitution and has also prayed that further direction be issued to the respondents to pay him the amount of gratuity together with interest with effect from 1.9.1989 till the date of payment.
3. Prayer has also been made for quashing the order dated 25.8.1989, under which the respondent No. 1 has ordered for continuation of inquiry against the petitioner after retirement.
4. The facts of the case in brief are that the petitioner was served with a charge-sheet dated 18.10.1988 for misconduct alleged therein. The period of misconduct alleged is of 1.2.1978 to 11.2.1980, when the petitioner was serving as Senior Town Planner in the office of the Ahmedabad Urban Development Authority (AUDA for short). The petitioner was served with another charge-sheet dated 30-8-1989, i.e, on the day prior to the date of his retirement from service. The petitioner replied to both the charge-sheets aforesaid. In exercise of powers conferred upon respondent under Rule 189A of the Bombay Civil Services Rules, 1959 (hereinafter referred to as “the Rules”), the respondent passed order dated 25.8.1989, inter alia informing him of continuance of the inquiry commenced against him. The resultant effect of the said order was that the amount of gratuity payable to the petitioner stood withheld.
5. This Special Civil Application has been admitted by this Court on 28th January 1991. By way of interim relief, it has been ordered by this Court that the respondent shall deposit the amount of gratuity payable to the petitioner in this Court on or before 18th February, 1991. It is not in dispute that in pursuance of the said order of this Court, the respondents have deposited Rs. 77,625/- in this court on 15th February 1991. Under this Court's order dated 26th February 1991 the petitioner was directed to be paid Rs. 47,625/- out of gratuity amount deposited by respondents and Rs. 30,000/- was ordered to be retained and invested by way of fixed deposit in some nationalized bank for a period of six months. On Civil Application No. 1747 of 1991 filed by petitioner, this Court, on 26th September 1991, directed that out of Rs. 30,000/-, Rs. 25,000/- and the interest accrued thereon be paid to the petitioner and the remiaining amount of Rs. 5,000/- was ordered to be deposited with nationalized bank for a period of one year. So, uiider the interim orders which have been made by this Court from time to time, out of Rs. 77,625/-, the petitioner has been paid Rs. 72,625/-, and only an amount of Rs. 5,000/- is lying deposited in fixed deposit under the Court's order.
6. The petitioner filed Civil Application No. 6626 of 996 before this Court and prayers have been made therein that the office may be directed to pay the petitioner, Rs. 5,000/- plus interest accumulated thereon, and the respondents may be directed to pay the petitioner, interest at the rate of 18% p.a on the amount of Rs. 77,625/- for the period from 1st September 1989 to 15th February 1991, the day on which the aforesaid amount has been deposited by the respondents in this Court. Third prayer has been made that the respondents may be directed to pay to the petitioner, costs of the Civil Application and also costs of Special Civil Application.
7. There is no dispute between the parties that both the departmental inquiries which have been initiated against the petitioner, have been concluded in his favour and the petitioner has been exonerated of the charges. In Civil Application No. 6626 of 1996, the petitioner filed copies of the orders of respondents under which both the charge-sheets were concluded in his favour and he was ordered to be exonerated. These are the orders dated 13th September 1994, and 15th July 1995. There is no dispute on these orders. Both the inquiries have been dropped as no charge, levelled against the petitioner, has been found proved. The petitioner has been exonerated in both the charge-sheets and as such the action of the respondents to withhold the payment of gratuity was not justified. The Special Civil Application has been filed by the petitioner before this Court on 13th August 1990, after waiting for a reasonable time within which the inquiry is likely to be completed, but even after filing of this petition, the respondents have taken a long time of about four to five years in completing inquiries. Taking into consideration the fact that the inquiries have been delayed, this Court has passed orders on Civil Application filed by the petitioner and the substantial amount of gratuity was ordered to be paid to the petitioner. Now only Rs. 5,000/- remains deposited in the fixed deposit with this Court. The petitioner has been exonerated from all the charges and as such, withholding of his gratuity for the period from 1st September 1989 to 15th February 1991 was unreasonable, arbitrary and unjustified. After exoneration of the petitioner of the charges, he becomes entitled for all the consequential benefits. The Court has protected the petitioner and under the Court's order, the amount of gratuity has been deposited by respondents in this Court on 15th February 1991 and as such, from the said date, it cannot be said that the respondents have withheld the gratuity of the petitioner, but at the same time, considerable amount of Rs. 77,625/- have been withheld by the respondents for the period from 1.9.1989 to 15.2.1991, for which now there is no justification as he has been exonerated of all the charges in both the inquiries. The petitioner has to be compensated for the loss which he suffered because of illegal withholding of his gratuity amount of Rs. 77,625/- and it can only be done by awarding interest at a reasonable rate. The petitioner, in the Special Civil Application has prayed for awarding interest on the amount of gratuity which was illegally withheld by respondents., but it has not been prayed as to what rate of interest has to be awarded, but in the Civil Application No. 6626 of 1996 the petitioner has prayed for awarding of interest on the amount, of gratuity which has been withheld by the the respondents for the period from 1.9.1989 to 15.2.1991, at the rate of 18% p.a The petitioner has been deprived of use of his own money by respondents without any cause and reason, and as such, the prayer made by petitioner for awarding interest deserves acceptance. The learned Counsel for the respondents contended that as per the Government Resolution, interest has to be awarded at the rate of 9% p.a, but I do not find any justification in this cotention. In case the petitioner would have deposited his amount for a long term in fix deposit, then he would have earned interest atleast at the rate of 12% p.a In the case of Union of India v. S.S Sandha Walia, reported in JT 1994 (1) SC 62, the Hon'ble Supreme Court has awarded interest at the rate of 12% p.a on the amount which were payable to the respondent therein, who retired as Chief Justice. Those were the amounts payable to the Government servants on retirement which were illegally withheld and the loss suffered by the employee has been ordered to be compensated by awarding interest at the rate of 12%. Taking into consideration the totality of the facts of the case, I consider it to be reasonable that the petitioner should be awarded interest on the amount of Rs. 77,625/- at the rate of 12% p.a from 1st September 1989 to 15th February 1991.
8. The next claim of the petitioner which deserves consideration is the prayer for awarding costs. The respondents' Counsel has strongly opposed the prayer of the petitioner for awarding the costs, and he contended that the costs should not be awarded in the present case as the respondents have already deposited the amount of gratuity in this Court. It is true that the respondents have deposited the amount of gratuity in, this Court under this Court's directions, but it is also a fact that the petitioner, a retired officer of the Government was constrained to file this Special Civil Application before this Court and unfortunately for him, for the reasons beyond his control, has to pay fees to three Advocates.. The first and the second Advocate engaged by the petitioner have been elevated to the Bench of this Court and he has to engage third Advocate. I have taken out from the learned Counsel for the petitioner as to what amount has been spent by him after his engagement in the litigation, inclusive of his fees. He has accordingly given out figures which are noticed. The petitioner in addition to the legal fees paid to the three Advocates, would have also incurred expenses for filing this petition and two Civil Applications. The Special Civil Application runs in 165 pages plus two pages of index, totalling to 167 pages. The present Civil Application No. 6626 of 1996 also runs in 11 pages exclusive of index. So the petitioner would have incurred heavy expenses of typing in addition to incidental expenses which, includes the Court-fees and other expenses. It is not the case of respondents that the petitioner has not paid fees to the Counsel and he has not incurred anything towards the expenses of filing the Special Civil Application an two Civil Applications. Taking into consideration the totality of the facts of this case, and the figure of fees of third Advocate and expenses incurred by the petitioner, I consider it to be appropriate to award Rs. 10,000/- by way of costs of Special Civil Application and Civil Applications.
9. In the result, this Special Civil Application succeeds. The respondents are directed to pay interest to the petitioner at the rate of 12% p.a on the amount of Rs. 77,625/- for the period from 1st September 1989 to 15th February 1991. The respondents are directed to calculate the amount of interest on the aforesaid amount of gratuity for the period from 1st September 1989 to 15th February 1991 within one month from the date of receipt of certified copy of this order and the respondents shall make the payment thereof within a period of one month next. The respondents are also directed to pay to the petitioner, Rs. 10,000/- by way of costs. The respondents are further directed to pay this amount of costs to the petitioner within a period of two months from the date of receipt of certified copy of this order. Amount of Rs. 5,000/- lying deposited under the order of this Court in fixed deposit is directed to be paid to the petitioner forthwith with interest amount accrued thereon. Rule made absolute in aforesaid terms.
10. Application allowed.
Alert